The a16z Show - The Truth about 1000 True Fans + Pricing Our Attention

Episode Date: January 27, 2020

The idea of "1000 true fans" -- first proposed by Kevin Kelly in 2008 and later updated for Tools of Titans -- argued that to be a successful creator, you don’t need millions of customers or clients, but need only thousands of true fans. Such a true, diehard fan "will buy anything you produce", and as such, creators can make a living from them as long as they: (1) create enough each year to earn profit from each fan, plus it's easier and better to give existing fans more; (2) have a direct relationship with those fans, which the internet (and long tail) now make possible.But patronage models have been around forever; what's new there? How has the web evolved; and how are media, and audiences/voices finding and subscribing to each other changing as a result? If the 1000-true-fans concept is also more broadly "useful to anyone making things, or making things happen" -- then what nuances do people often miss about it? For instance: That there are also regular fans in the next concentric circle around true fans, and that the most obscure node is only one click away from the most popular node.Finally -- when you combine this big idea with another idea Kelly proposed in his most recent book The Inevitable (covered previously on this episode) on inverting attention economies so audiences monetize their attention vs. the other way around, how do we connect the dots between them and some novel thought experiments? In this hallway-style episode of the a16z Podcast, which Sonal Chokshi recorded with Kevin in our pop-up podcast booth at our most recent a16z Summit, we discuss all this and more. Because on average, we all currently surrender our attention (whether to TV, books, or whatever) for about $3 an hour. Whoa?! image: whatleydude/Flickr Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hi everyone, welcome to the A6 and Z podcast. I'm Sonal. Today's episode was recorded at our most recent annual innovation summit in our pop-up podcast booth with me and Kevin Kelly, founding executive editor of Wired magazine and author of several books. In this quick, literally hallway style chat, I ask him about two of his big ideas, the notion of 1,000 true fans, which sometimes people misinterpret or miss the nuances of, and two, the idea of being able to sell our own attention versus our attention being sold for very little. And we try to connect the dots between these and other ideas, including some new never been heard before ones in between. The second idea was also covered in his most recent book, The Inevitable, which we did a podcast on with Chris Dixon and his conversation with Mark at this summit is also available in this feed as well. Welcome, Kevin.

It's a real delight to be here. Thanks for having me. I think of you as one of the original thinkers of the future. We're just coming off of summit. One of the big themes was about the future of business models after advertising. This is a talk Connie gave last year, and then today she went further on that, like what happens when things become a super app. We had Kevin Chu from Forte talking about business models for crypto economics and gaming. And then we had Jonah Peretti and Chris Dixon talking about the evolution of the web and how so much of the promise of the web in some ways came about, but in other ways didn't, because of the sort of albatross around our neck of advertising as a business model.

So one idea I remember you talking about in your book that just blew me out of the water. like it was a Kevin Kelly's signature idea. Is this idea that you can actually in the future, we may be able to, quote, reverse our attention economy. You should actually explain this idea. Sure, sure. So the idea is in some ways disemeterating attention. So advertising model is, let's say, I am a company that I'm selling a widget.

And I want people to know about the widget. I want attention to the widget. So the normal way is I will hire advertising agencies. I will make ads that will go out and people will see the ad. So I'm paying an advertising company and they're going to make an ad that would then take that attention from the consumer. Right. But you could actually short-circuit that rather than having a two-step. What if I paid the audience directly for their attention?

Exactly. And so let's say I sent a call out and saying, I will pay you 25 cents to watch this ad. So you're getting paid for your attention, to give your attention to an ad. And it's not just ad. It could even be something like email. And so you could set up something saying,

I'll charge 25 cents to read your email. So you have to pay me for my attention. And so if it's true that attention is the only scarcity that we have in this world of abundance, how come you and I are giving our attention away for free? I completely agree, which is why I'm so glad we're finally talking about this. So a couple of quick things. On the example you just gave about email, that's a great example that's commonly cited for a way that we can fight the spam problem,

especially when you think about combining with crypto and, you know, blockchain economies where you can actually do micro payments in a scalable way because right now it's actually very cost prohibitive to charge someone 25 cents to read their email. And then if someone is a spammer, it's pretty unlikely that they're going to do a spray and pray method to try to get your attention, or even a spearfisher, whoever,

all the bad economic models of the web get broken to your point with this perfect example of email because the bad actors are not incented to pay for the attention. But I want to really dig a little deeper because your idea is a lot more nuanced, and I really want to pause the profound implications of what you're saying. So you're putting the power back into the consumer. The power of the attention is with us who have it.

We're surrendering it. We're giving away for free when we should really be charging. We want to have a technology that reverses that so the power is back with us. And there's a second aspect of that. Oh, good. This is what I want to hear. Which is that in media and publications, in that world, the publication that magazine, the newspaper, whatever that portal is, they don't really have choice about what advertisements they run. That is something that's decided by the advertiser. But what if

anybody could run an ad and you would get the benefits of that ad if people clicked on it, if people watched it? So what you have is you have an outsource crowd, decentralized version of an ad network where anybody is making an ad and anywhere anybody can run the ad. And you have the money flowing through the system. Again, using crypto to kind of keep or blockchain to keep track of things. But what that would mean is that you would have, you would have very, very creative people making ads that worked and the sponsors have to pay up when people actually watch them. And so what I'm trying to do is to imagine a decentralized.

centralized advertising system that put power back into the audience. But it would require something like crypto or blockchain to maintain the integrity and to have that financing. Right. The provenance, economics, the alignment of incentives, all the things, all the features. Credit money through as a follow these different things. So that's a possibility that we haven't really thought about before. I love it.

But less people think this is so far off because you're, you, You propose this idea in your book, The Inevitable, which is about the future. And who knows if that's five years, 10 years, 20 years, 100 years. Less people think that's so far off, let me give a concrete example today. So TikTok, basically what people are already doing in a D, and not necessarily decentralized, but certainly a bottom-up manner, the centralized platform is TikTok. They are essentially making ads. And these are short viral clips where they are promoting some idea, a product.

Because if you think about an ad is simply an ad for anything, whether it's a product, an idea, whatever. They're short. They go viral. And the reason they go viral is unlike on YouTube, where the algorithm is very optimized for people who are mature creators, have an established track record, et cetera, because it's all purely AI-based, it's not basing things on specified intent, but learned intent. It can let anybody, any creator, have a clip go viral, even if they don't have a huge following. And that's hugely powerful. So it's really fascinating is what you're basically describing is kind of already happening with TikTok. And now I just need to put the economic of getting those creators paid.

Because the other thing that I think is super interesting about this is that when you have new models, business models, it then in turn, this is this when you and I both care about, changes a creator economy that feeds it? Not only unlocking creators who maybe didn't come out before in the current model, but more importantly, you don't even have to get that big of a scale in order to be successful. It actually ties to your original true idea of 1,000 true fans. But that part of your idea that people don't talk about as much, they don't get past the 1,000 true fans is that not only do you get the 1,000 true fans, but you get the nodes next to them.

So I'd love for you to explain that, and then maybe we can connect the dots between this attention economy back to 1,000 true fans. Just to summarize the 1,000 true fans theory very, very quickly, which is that in the world in which you have direct contact with your audience, and when you're not going through the intermediate of a publisher, the studio, a record label, but you actually have. you have your fans that you're getting the money directly from. Yep. That if you could get a certain amount of money from them directly every year, that the number that you would need to make a living is in the neighborhood of thousands. So a thousand true fans, if you could get $100 each from one of your, for each of your fans for a year, then that's $100,000.

So, and that's what I would call a true fan, someone who's going to buy whatever you make, the hard cover, the soft cover, the singles, the box set, they're going to travel 200 miles to see you. That's your true fan. But that's just your true fans. And your true fans become basically marketers for this other concentric circle around them, which is kind of the casual fan.

And so it's your true fans who actually are doing the hard work of publicizing and promoting you to this other larger, even larger ones. So you get the income not just of your true fan. fans, but you get the larger income of that concentric circle that's right next to it. And the other aspect of 1,000 true fans is that in a world of a billion, now that we are global and we have a global system, even if there's only one in a million people who are interested in your idea,

you still have a thousand potential people. You just have to find them. So there's almost any idea you can come up with. Anything that you can imagine can probably find a thousand people on the point. planet to be true fans of it. And so that process of finding your true fans is really the process that we want to use

and we want to have tools that enable us to do that easier and easier. You wrote about 1,000 true fans in what year was it again? Gee, it was right before Kickstarter. It was probably like, I don't know, 2007. It was very precious as always, so it was very early. Then Chris Anderson, our mutual friend,

wrote the long tale around either before or after them, forgetting when he wrote that. 2006 is I think when that book was. Right. I think he wrote before. Right. And the idea of the long tale is that the internet lets you find these niche communities. So that goes to the discovery aspect. And you can actually create communities around niches. Then you wrote 1,000 true fans. And now today we're talking about this idea of monetizing and reversing the attention economy. What I'm hearing you say when we connect all those dots is that we now finally have a business model for those

1,000 true fans to monetize because what readers are essentially doing. If you imagine a world where the reader is at the center of a future media. where there's a million publications like this and whatever forum podcast, newsletter, blog post, doesn't matter, you know, decks, whatever. We now have a way and add crypto in for an economic internet that empowers creators of all kinds to now empower readers to monetize their attention and essentially curate their custom personalized, perfectly curated dream holy grail paper of their choice, but that'd be printed on demand by selling their attention.

I even have another idea that I think was patentable. Patents don't give you much. So I decided to publish it instead of patenting it. And it was called, I'll pay you to read my book. Tell me more about this. I've never heard this. The problem with books these days is I don't care about selling books. I want people to read my books.

And it's so, attention is so, so scarce that I said, look, I'll pay you to read my book. And I'm going to make money doing it. How? Here. So it's an e-book. And what it is is I'll sell the book for, let's say, $4. And then I will pay you $5 if you finish reading the book. And we can tell, Amazon can tell, whether you've read the whole book or not. Right. They already have that data.

Right. And so most people probably won't finish it. And so I think the total amount that they would make would exceed the amount that I have to pay out. So there would probably fewer people who are going to finish it. Interesting. And so I could adjust those numbers. But I would sell it for very little and I would pay you as you actually finish reading it. So the idea is, I'm paying for your attention. Yes, you are.

The completeness of the attention. Because what I love is that you're not saying it's an either or a binary yes, no. It's actually a degree. What I love about this is, A, it very much fits into a world where entering now where there is no discrete beginning and end. Like Doug Rushkoff and I talked about narrative collapse, you know, like in one of an op-eds I did it from yet wired in this world of Game of Game of Thrones. binge watching, the everlasting story, gaming economies, gaming narratives.

We just talked today about how gaming is bigger than music and entertainment film combined, huge economies. And those narratives are endless narratives. So what I love about what you're saying is essentially it's a way to optimize for the few rare completers while also making money off the people who are dipping in and out and not going to complete the thing. So it puts it on a degree and kind of a continuum. But the second thing that I love about it is.

is that if you, this is a crazy counterintuitive part of this, if your idea and your book is so damn good that people are going to read the entire thing, you're actually going to pay them a lot more because you're paying them a dollar extra to make this happen. And so tell me about the flip side of it. Does it actually make creators not want to, because one thing that Connie's talked about in China is that there's actually apps that let people, readers weigh in on books as they're being created, and that then in turn changes in narrative or how many chapters.

This reminds me the Charles Dickinson Day of like paying by word. So the reality is that very few people make real money from books. I don't make my living from books. I make my living from giving talks about the book. So the book is like a vehicle for the container for the idea. That's true for more and more people. The actual book itself is just a part of this network. And so you can still lose money on a book and many authors do and still make overall.

It's particularly important when you are talking about ideas. Maybe this doesn't work if you're just writing novels. Yes. But if you're trying to get ideas out... This is what we both care about, more than anything. Then, again, the battle for attention is so great that I am willing to pay you for your attention. By the way, one thing I also about attention is I did these calculations of the total amount of attention that are given to different media. And I found out that on average, we surrender our attention for about $3 an hour.

Wow, that's so cheap. That's ridiculous. So I looked at the total amount of time. you spend reading a book and how much you can charge, how much you pay for the book, for a movie, for whatever it is. And it comes out to very, very low pay that we are accepting for our attention. It's insane. It's just that we value our attention at.

And so, you know, and when TV, TV is, if you take all the amount of hours that people watch TV and the total amount of revenue TV, that's what has come out to be. Yeah. It's like we're giving up our attention for such small ways. So we really want to be charging more. Well, what I love about this is it puts, again, people at the center. And what I love about what you're saying is this is a way to be optimistic about the future that readers and creators can be empowered by putting better models in place that align incentives

that remove adverse selection and bad alignment of incentives that we can actually embrace a better future. So thank you for joining this episode of the A66P podcast. Yeah, and if we were really doing things, we would be paying you, listener, right now. The listener. Yes. That's fantastic listeners. We need to be paying you. Thank you so much for listening.

Kevin, thank you so much for doing the A66 and Z podcast live from the Andrewsson Horowitz's annual Innovation Summit. The future is inevitable. Good. Good.